Trade Liberalization In India Research Articles

A STUDY ON THE IMPACT OF TRADE LIBERALISATION IN INDIA

The impact of trade liberalization in India has been a subject of significant academic and policy interest, particularly since the early 1990s when the country embarked on a path of economic reforms. This research paper explores the multifaceted consequences of trade liberalization on India's economy. Through a comprehensive analysis of empirical data, economic indicators, and scholarly literature, the paper examines both the positive and negative impacts of trade liberalization. The positive effects of trade liberalization are evident in India's impressive economic growth, driven by increased exports, foreign direct investment, and enhanced efficiency and competitiveness of industries. The opening of international markets has expanded consumer choices and improved product quality. Export growth has bolstered foreign exchange reserves and positively influenced the balance of payments. However, this paper also delves into the challenges posed by trade liberalization. It highlights the vulnerability of the Indian economy to external shocks due to increased global integration. Income inequality has widened as the benefits of liberalization have not uniformly reached all segments of society. Job displacement, particularly in industries facing stiff competition from imports, and agricultural challenges arising from competition with cheaper imported agricultural products, are significant concerns. The paper emphasizes the need for policymakers to address the negative consequences of trade liberalization by implementing measures to mitigate income inequality, support displaced workers, and strengthen the agricultural sector. The method used here was the empirical method. The sampling method taken here was the convenient sampling method and the sample size was 200. The sampling frame was established within the city of Chennai, located in the state of Tamil Nadu. The dependent variables are level of awareness regarding the impacts of trade liberalization in India, positive impact of trade liberalization on India's GDP, negative implications of trade liberalization on the Indian economy, main objectives of economic liberalization are the effective distribution of resources and competitive advantages and the independent variables are age, gender, educational qualification, salary and occupation. The research tools used here are simple bar charts, independent sample T test, univariate analysis of variance and correlation . It also underscores the importance of strategic economic planning to manage potential trade imbalances and prevent undue concentration of economic power. In conclusion, this research paper provides a comprehensive analysis of the impact of trade liberalization in India, highlighting its dual nature bringing both opportunities and challenges. By examining empirical evidence and drawing insights from scholarly sources, the paper contributes to a nuanced understanding of the complex relationship between trade liberalization and economic outcomes in India. KEY WORDS: Trade liberalisation, Global market, Trade barriers, Domestic sectors, Gross Domestic Product (GDP).

Relationship between fixed capital formation and carbon emissions: Impact of trade liberalization in India

Relationship between fixed capital formation and carbon emissions: Impact of trade liberalization in India

Trade Liberalization in India: Poverty’s Pal or Foe?

Poverty is the greatest challenge to the mankind. Gandhi, described poverty as worst form of violence. Poverty may be defined as a state of spiritual and financial deprivation, preventing people from attaining their full potential and realizing their self fulfillment. Since decades, the development economist's worlds wide are worried about the solution to eradicate poverty. The solutions suggested from time to time include providing education, health facilities, land reforms, micro credits, self help groups, infrastructure, debt relief programmes, public vaccine programmes. The governments too acting on the suggestions of the good economists tried to boost purely the economic growth indicators especially the GNP and Per capita income expecting trickledown effect thereby effecting in reduction of poverty.

Adjustment to trade opening: The case of labor share in India's manufacturing industry

While trade opening is generally welfare enhancing, it requires a reallocation of capital and labor across sectors and firms. The empirical evidence on how this reallocation works is still relatively thin. Our paper contributes to this literature by studying how the labor’s share of income adjusted due to trade liberalization in India’s formal manufacturing sector during the period 1998–99 to 2007–08. Our baseline model suggests that a fall in output tariffs led to an increase in the labor share while a fall in input tariffs brought about a decrease in labor share. However, once we control for factor and technology intensity of production, we find that this differential impact of tariff reduction on labor share aligns with these classifications. Tariff liberalization led to a decline in labor share in technology and capital-intensive sectors while in labor-intensive and low-tech sectors it brought about an increase. This suggests that following trade opening, demand for labor improved in labor-intensive and low-tech sectors but deteriorated in capital-intensive and high-tech sectors. India’s manufacturing bias towards the latter explains the overall decline in labor share in the post-reform period. Furthermore, we find that labor adjustment occurred more efficiently in states with flexible labor laws.

Food Trade Openness and Enhancement of Food Security—Partial Equilibrium Model Simulations for Selected Countries

This research measured the welfare impacts of food trade liberalization in India, Egypt, Pakistan, Saudi Arabia, and the United Arab Emirates (UAE) using the partial equilibrium model—World Integrated Trade Solution (WITS). Macroeconomic settings, domestic policy objectives, and food security indicator data are used to assess the implications of the simulations on food availability and stability. Simulation results for India, Egypt, and Pakistan indicate annual welfare gains (consumer surplus) of 2571, 340, and 25 million USD, respectively, while Saudi Arabia and the UAE have gains of 14 and 17 million USD. Results show that tariff elimination would have wide-ranging welfare impacts across food commodities within these countries. Moreover, reductions for specific commodities directly relevant to food energy and protein availability would have a greater direct impact on the poor. Lowering the highest tariffs on those commodities might raise the real incomes of more than 350 million persons by 7.5% or more and could create shifts in consumption towards more diversified and nutritionally sound diets.

The Effect of Trade Liberalization on Marriage and Fertility: Evidence from Indian Districts

Using a district-level panel data constructed from four waves of decennial Indian Census covering 1981-2011, we examine the medium run (1991-2001) and long run (1991-2011) impacts of the 1991 trade liberalization in India on marriage and fertility rates among young women aged 15-34 years. We exploit the fact that the countrywide tariff reductions that varied across industries created exogenous local labor market shocks based on the initial industrial composition of the district. We find that districts that were more exposed to tariff cuts witnessed a larger increase in marriage rate, especially in urban areas, compared to districts that were less exposed to tariff cuts. Fertility rate declined in districts that were relatively more exposed to tariff reductions, with the effect mostly driven by the rural areas. On average, the trade reform had no negative impact on the employment of young men and women. While we can explain our findings on marriage rates with the help of aggregate labor market indicators which indicate no adverse effect on the workforce participation rate of young men and women, thus increasing their prospects of marriage, the decline in fertility points towards a quantity quality trade-off where families invest in the quality of children when economic prospects improve.

Does trade liberalization create more pollution? Evidence from a panel regression analysis across the states of India

Following the economic liberalization policies that have been adopted in India in 1993, the country has experienced phenomenal improvements in economic growth, industrialization, and trade flows. This paper has evaluated the environmental impacts of trade liberalization in India. The empirical strategy followed in this paper is that the impact of trade openness on environmental pollution has been decomposed into scale, technique, and trade-induced composition effects. Data on air pollution indicators such as sulfur dioxide (SO2), nitrogen oxide (NO2), and suspended particulate matter (SPM) and other socio-economic variables across the major industrial states of India over the time period 1991–2013 have been collated, and panel regression models have been applied for such impact estimation. The results establish that the impact of growth and trade liberalization on environmental pollution is not consistent across the pollutants rather it depends upon the specific indicator that is examined. For example, higher trade flows have helped reduce SO2 concentration; however, the same could not be said for NO2 and SPM. It is concluded that free trade policies in the presence of a dynamic pollution regulatory framework can yield sustainable trade.

The effect of parental labor supply on child schooling: evidence from trade liberalization in India

This paper estimates the effect of changes in maternal and paternal labor supply on the schooling rates of children in India using the variation in industry-specific tariffs during a period of trade liberalization. The results show that an increase in maternal labor supplied outside of the household leads to a higher schooling probability for younger children. Specifically, a 1 day per week increase in maternal labor supply is associated with an approximately 5 % points increase in the schooling probability for children between the ages of 7 and 10. However, father’s labor supply has an insignificant effect on child schooling across all specifications. The effect for older children between the ages of 11 and 14, who face a tradeoff between schooling, market work, and domestic work, is also found to be insignificant.

Agricultural market integration in India: An analysis of select commodities

One of the main arguments against agricultural trade liberalization in India is that the markets are not sufficiently integrated. The present study makes a systematic attempt to assess the extent and degree of integration among select agricultural markets in India. We have used the common factor representation of the cointegrated series, called Gonzalo–Granger (G–G) model, to assess the extent of market integration. Degree of market integration has been assessed using the persistence profile approach. Our results indicate that the commodity markets that do not face inter-state or inter-regional movement restrictions, like gram and edible oils, appear well-integrated. On the contrary, rice market, subject to the maximum inter-state movement restrictions, does not show integration at the national level. The broad implication of the study is that the markets can play a more effective role if supplemented with more open policy initiatives.

Trade Liberalization and Wage Inequality: Evidence from India

AbstractWe evaluate empirically the impact of the dramatic 1991 trade liberalization in India on the industry wage structure. The empirical strategy uses variation in industry wage premiums and trade policy across industries and over time. In contrast to most earlier studies on developing countries, we find a strong, negative, and robust relationship between changes in trade policy and changes in industry wage premiums over time. The results are consistent with liberalization‐induced productivity increases at the firm level, which get passed on to industry wages. We also find that trade liberalization has led to decreased wage inequality between skilled and unskilled workers in India. This is consistent with the magnitude of tariff reductions being relatively larger in sectors with a higher proportion of unskilled workers.

The Impact of Trade Liberalization on Gender Wage Differentials in India's Manufacturing Sector

As trade liberalization in India has unleashed a new wave of competitive forces in the economy since 1991, firms have faced growing pressure to cut costs in order to continue production. This study addresses the question of whether the increasing competitive forces from India's trade liberalization affected the wages of male and female workers differently. Neoclassical theory implies that costly discrimination against female workers should diminish over time with increased competition (Becker 1971). We incorporate this idea into a theoretical model of competition and industry concentration in which the net impact of international trade on the gender wage gap could be positive or negative depending on the initial size of Becker's discrimination coefficient. Our study tests the theoretical model using repeated cross sections of India's NSSO household survey data merged with trade and production data from 1983 to 2004. We employ OLS and Fixed Effects techniques at the industry level to estimate the relationship between the male-female residual wage gap and measures of domestic concentration and international trade competition. Results indicate that increasing openness to trade is associated with a widening in the wage gap in India's concentrated manufacturing industries. This result is consistent with female workers in India having weak bargaining power and a lower workplace status. They are thus less able to negotiate for favorable working conditions and higher pay, a situation that places them in a vulnerable position as firms compete in the global market place.

Trade Liberalization and Wage Inequality: Evidence From India

We evaluate empirically the impact of the dramatic 1991 trade liberalization in India on the industry wage structure. The empirical strategy uses variation in industry wage premiums and trade policy across industries and over time. In contrast to earlier studies on developing countries, we find a strong, negative, and robust relationship between changes in trade policy and changes in industry wage premiums over time. The results are consistent with liberalization-induced productivity increases at the firm level, which get passed on to industry wages. Since tariff reductions were proportionately larger in sectors that employ a larger share of unskilled workers, the increase in wage premiums in these sectors implies that unskilled workers experienced an increase in their relative incomes. Thus, our findings suggest that trade liberalization has led to decreased wage inequality in India.

Trade Liberalization and Wage Inequality: Evidence from India

We evaluate empirically the impact of the dramatic 1991 trade liberalization in India on the industry wage structure. The empirical strategy uses variation in industry wage premiums and trade policy across industries and over time. In contrast to earlier studies on developing countries, we find a strong, negative, and robust relationship between changes in trade policy and changes in industry wage premiums over time. The results are consistent with liberalization-induced productivity increases at the firm level, which get passed on to industry wages. Since tariff reductions were proportionately larger in sectors that employ a larger share of unskilled workers, the increase in wage premiums in these sectors implies that unskilled workers experienced an increase in their relative incomes. Thus, our findings suggest that trade liberalization has led to decreased wage inequality in India.

Transition Problems in Policy Reform: Agricultural Trade Liberalization in India

AbstractWhat will be the domestic growth and distributional effects of agricultural trade liberalization in India? How fast should Indian agriculture be liberalized and what policies should characterize the transition? This paper uses Indian agriculture to analyze medium‐term transition problems that arise in many major economic reforms. Employing a dynamic applied general‐equilibrium model, the paper focuses on the implications for policy design of the absence of efficient capital and labor markets and on the distributional consequences of economic reform in the presence of realistic limits on available intervention instruments. The key finding is that trade adjustment should be supplemented by policies that raise land productivity and, because this takes time, the adjustment should be gradual.

Price formation in world wheat markets — implications for policy

This paper is an attempt to understand the price formation mechanism in world wheat markets and trace its likely implications for agricultural trade liberalization in India. The main objective is to identify the determinants of price formation and more specifically to understand the influence of major exporters/producers on the stability of world wheat markets. The analysis, using a two-sector econometric model, indicates that output and stock-holding policies of major exporters like USA, Canada and Australia hold large implications for the stability of world wheat markets. In the domestic sector, simulation results show rigidity in supply-response to higher world prices, possibly due to constraints imposed by non-price factors. Exports are likely to increase and imports show a likely decline. Stagnant domestic production combined with increased exports, decreased imports and rising population is likely to result in a decline in per capita net availability of wheat in domestic market leading to an increase in domestic prices. This is confirmed by our simulation results, which show a growth rate of more than 8.5% per annum in nominal terms in case of domestic prices, after liberalization.

Impact of Trade Liberalization on the Level of Protection of Indian Industry

The staring point of this study was the need to explore the impact of recent trade liberalization in India on the level of protection of Indian industry. This search led to an exploration of the phenomenon of trade liberalization in general and the process in India, in particular, and this provided the backdrop for the study. Trade liberalization refers to freeing foreign trade of the restrictions imposed on it, in the form of tariffs, non-tariff barriers, like quotas, import licensing or exchange control regulations etc. The objective of trade reform is to move toward freer trade and enhanced competition; and trade reform policy involves a number of design issues ego the extent and sequencing of trade reforms that have to be determined by the authorities, in the light of their economic necessity, political feasibility and the administrative capacity.

Trade liberalization, market discipline and productivity growth: new evidence from India

This paper investigates the effects on competition and productivity of the dramatic 1991 trade liberalization in India. Using firm-level data from a variety of industries, we find strong evidence of an increase in competition (as reflected in the reductions in price-marginal cost markups) and some evidence of an increase in the growth rate of productivity. The methodological framework differs from earlier studies in that we `allow' for returns to scale to change after the liberalization, a relaxation of estimation restrictions that improves our estimates allowing more accurate (partial equilibrium) computation of welfare changes. Welfare analysis using the estimated parameters mostly suggests an increase in welfare, albeit quite small, in the sectors analyzed.

The political economy of trade liberalization in India

The political economy of trade liberalization in India